I have a client who has not paid me. Sent various reminders, and phoned various times, but still no payment. Sent a final reminder before legal action. Has anyone had to go through the small claims court? Is there other things I should check first? I know they were having cash flow problems, and I gave them extra time etc. But there is only so long that I can wait for payment as i also have bills to pay.
What happens if they do not have the cash to pay me?
I obviously dont want to pay out for legal fees if I am wasting my time. Debt approx £1000.
I suggest you download the 'small claims' forms and fill them out and send your client a copy along with a letter stating that the oiginal will be posted in 5 days unless payment is received. Sometimes manages to galvanise them into opening their wallets!
I'd send it to them, it shows you are serious but if they do not respond carry out the threat. Although clearly you have to make a commercial judgement, if they owe you £50 maybe not worth the bother!
Did you offer them payment in instalments or something like that? If they haven't got the money maybe it is easier to get something from them on this way..I believe if it is around £1000 you can even start bankruptcy proceedures against them but it still does not mean you would see even a penny. Or offer them something like 30% discount if they pay within so many days (like pay me £700 and i forget i ever knew you). If they have serious problems, lot of debt, etc you might not see any of your money. Small claims court cost you something like £70 ( if i remember well) but you might not get it back. If you did their books you should know how serious their cashflow problems are and you should deal with them accordingly... ( these are just ideas, i don,t know if they would work or not) Try not to get in to the ok i send you a cheque business if possible go and collect the cash from them in person ( if they pay some of the monies) it gives you some more ideas about their situation ( if you visit them and they are already selling the furniture you know you have not got long to get your money before they disappear) If their situation is not that serious they just don,t want to pay but they have money then go down the small claims court route.
I know about 15 years ago I went to the small claims court in Scotland (different legal system) and I think it had to be under £750. I used to cycle to work and was hit by an un-insured driver. Although he gave documents to the police to say he was insured (so the Police obviously never paid any attention to the documents).
When I won the case against him I then had to get an earnings arrestment against him. He ended up paying a hell of a lot more than the original claim against him. What angers me was him being able to drive about un-insured after the event. How do I know he was un-insured after the event? His car had no licence. Talk about rubbing salt into the wound.
Back on topic. Isn't there also interest you can claim on commercial debts. (I'm assuming this claim is against a business).
__________________
Never buy black socks from a normal shop. They shaft you every time.
Have you still got any of their paperwork that you cna keep hold off?
I was owed some money alittle while ago, fortunately not alot, anyway his accountant phoned me and he already knew that I had told the client that I would not be dealing with him anymore, (long story but he had to go!), anyway told the accountant that he wouldn't get reports that he needed unless the client paid me! Client phoned the next day and then a few days later turned up with the cheq. I waited for it too clear and then gave them everything.
My client didn't have cash flow problems just was always a late payer, I use to add abit onto the invoice because I knew each time it would cost me money in phone calls and texts to get my money, so I got wise to it and added abit on for my inconvenience.
Small claims limit is normally £5000. if they lose the case and don't pay you will have to go back to the same court to apply for an order to get the money (called enforcing the judgment) and you will have to pay a fee to start enforcement proceedings. you can use money claim online to do claims and everything electronically. This is Her Majesty's Courts Service Internet based service for money claims and you can track everything on the internet. There are time limits as well after what you cannot claim but these are normally very long you should not worry about them. I still would suggest only use the court if you ran out of ALL other options.
You can try solicitors letter. 'A solicitor's letter threatening court action can produce quick results. For example, if your debtor is a business, your solicitor can issue a Statutory Demand petitioning for a formal winding up of the debtor's business if they do not pay within 21 days.'
Or maybe speak to an accountancy firm if you have good relationship with one . 'Many accountants offer a debt collection service as well as advice on credit control and collection procedures'
Or you can try a debt collection company, they take a fee (normally only if they collect the money and around 10-15%) but still getting something is better then nothing.
And if no options left only court still you must check if the debtor: has any money or assets to pay the debt (especially if the debtor is a limited company) has any outstanding unpaid county court judgments (Sheriff Court decrees in Scotland) against them otherwise you haven,t got much chance getting any money. Very annoying when you have clients like that. Working in their interest and this is how they say thank you.
Hope this helps, Attila
-- Edited by attilabenko on Thursday 29th of April 2010 02:03:30 PM
I believe you will also want to add loss of earnings and expenses to the claim, for hearing appearance (time lost from business, travel etc). If you don't the court only considers the amount owed.
I think you can only claim interest on an outstanding debt if there were late payment penalty clauses agreed at the start.
It may also be worth adding a comment to any further communication you have with your ex client about additional costs being incurred.
If it were me, I personally would make every effort to recover your money owed.
Hi Bill, Info from HMCS: 'You may also be able to claim interest under the Late Payment of Commercial Debt (Interest) Act 1998 (see page 9). You may be able to claim interest from the date payment was due to the date of judgment (even if your contract with your customer does not include interest). This is allowed by the rules of the court and is called statutory interest.' 'If you want to claim interest, you should include the following text in the section titled Particulars of claim on the form: The claimant claims interest under section 69 of the County Courts Act 1984 at the rate of [8]% a year from [date when the money became owed to you] to [date you are issuing the claim] of £[amount] and also interest at the same rate up to the date of judgment or earlier payment at a daily rate of [daily rate of interest]. The rate of interest depends on the type of claim that you are making. For more information, speak to a legal adviser.
There is lots of useful information on the HMCS website about how to make a claim and what are the chances of actually getting your money.
Have a look at www.thomashiggins.com have used these in the past via various places I have worked. So far, fingers crossed have not experienced bad payers !!
